Coca-Cola, Exxon give the Dow a boost

By Charley Blaine and Elizabeth Strott

The stock market rally that erupted in March proved its toughness today.

It had many reasons to fall: an overripe rally since March, continued weakness in housing, selling pressure in technology and financial stocks, higher oil prices, the probable bankruptcy of General Motors (GM, news, msgs) next month.

While the market bent, it did not break.

For that, thank defensive stocks like Coca-Cola (KO, news, msgs) and Pfizer (PFE, news, msgs) and energy stocks like Exxon Mobil (XOM, news, msgs), and Chevron (CVX, news, msgs).

Strength in these four stocks is the reason that the Dow Jones industrials ($INDU) closed up 50 points, or 0.6%, to 8,469.

The Standard & Poor's 500 Index ($INX) was down 1 point, 0.1%, to 908. But, significantly, the broad-based index recovered from selling that pushed it below 900 for the first time since May 1.

The Nasdaq Composite Index ($NDX.X) was off 15 points, or 0.9%, to 1,716. The Nasdaq-100 Index ($NDX.X), which tracks the biggest Nasdaq stocks, had tumbled 18 points, or 1.3%, to 1,377. Both, however, were well off their lows.

Stocks may get a boost Wednesday from Intel (INTC, news, msgs) CEO Paul Ottolini, who told investors today that the chip giant's business in the second quarter was "a little better than expected." Intel did not offer a formal outlook for the second quarter, but said it expects revenue to be roughly flat to the first quarter.

Intel shares were up 3.8% after hours to $15.79. The shares had fallen 1% to $15.21 in regular trading.

Futures trading showed the major indexes may well open higher on Wednesday.

Coca-Cola, up 3.9% to $44.40, and Pfizer, up 5.5%, to $14.93, were higher because many investors are worried about the weak economy and want defensive stocks. Exxon, up 2.2% to $70.82, and Chevron, up 1.8% to $69.19, moved higher after crude oil closed up 35 cents to $58.85 a barrel in New York. Crude briefly crossing $60 earlier in the day.

Crude rallied to a six-month high after China, the world’s second-biggest energy-consuming country, increased crude imports by 14% in April.

Still, the selling pressure that hit the stock market on Monday was still at work. And if you want the market to move significantly higher, you need growth stocks to lead the market.

Moreover, as Uri Landesman, head of global growth strategies at ING Investment Management, told The Associated Press today, "We need to see not just the promise of recovery, but actual data."

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Financial stocks and a number of key technology stocks were pressured all day. Apple (AAPL, news, msgs), down 4% to $124.42; Qualcomm (QCOM, news, msgs), down 2.4% to $40.93; and Google (GOOG, news, msgs), down 2% to $399.01, were the heaviest weights on the Nasdaq and Nasdaq-100.

Apple rose 70% between Jan. 20 and Wednesday. It's down 6.1% since then. Yahoo (YHOO, news, msgs), which had risen 74% between Nov. 20 and its Monday close of $15.54, was down 2.8% to $15.10.

Financial stocks were the biggest losers, largely because many banks have announced plans to sell new shares to pay off assistance from the government.

But investors are selling because the stock issues will dilute their holdings. BB&T (BBT, news, msgs) shares were down 7.8% to $22.45. Wells Fargo (WFC, news, msgs) was off 3.1% to $25.70. SunTrust Banks (STI, news, msgs) was down 12.4% to $16.21. And Bank of America (BAC, news, msgs) fell 5.3% to $12.26.

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In addition, a host of retail companies will report quarterly profits, including Macy's (M, news, msgs), Stanley (SXE, news, msgs), Whole Foods Market (WFMI, news, msgs) and Dr. Pepper Snapple Group (DPS, news, msgs).

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$58.85	$58.50	$0.35	15.12%	31.95%
Heating oil (per gallon)	$1.5070	$1.5009	$0.0061	14.63%	7.21%
Natural gas (per million BTU)	$4.4490	$4.3020	$0.1470	31.90%	-20.86%
Unleaded gasoline (per gallon)	$1.6679	$1.6802	-$0.0123	13.14%	65.43%

Greenspan: A housing bottom near

Former Federal Reserve Chairman Alan Greenspan said today a bottom in the housing market is near.

Greenspan told a conference of the National Association of Realtors that the United States is "at the edge of a major liquidation" in the stock of unsold properties. That may help stabilize prices, he added.

Greenspan's improved the market's mood about housing. A report from the NAR that the median price of a home fell 14% in the first quarter weighed on stocks. The report pushed homebuilding stocks lower. Pulte Homes (PHM, news, msgs), down as much as 8% at 1:30 p.m. ET, saw the loss trimmed to 4.6% at $10.71. Lennar (LEN, news, msgs) fell 4.4% to $9.93; Ryland (RYL, news, msgs) was off 1.7% to $20.25

The national median price of a single-family home fell to $169,000 in the first quarter from a year ago. That was a bigger decline than the fourth quarter of 2008, when the median price fell 6.2%.

Moreover, the report said, prices fell in 134 of the 152 metropolitan areas the NAR surveys, which is about nine out of 10 U.S. cities.

Home sales fell in all but six states, including California and Nevada, which have been hammered by the housing market meltdown. Sales more than doubled in Nevada, and they rose 81% in California, adding a glimmer of hope that the worst of the mess might be over in those places.

First-time homebuyers, often entry-level buyers, were responsible for about half of all sales in the quarter, with many other buyers taking advantage of the discounted prices on foreclosed properties. Such distressed properties typically sell for about 20% less than other homes for sale.

"In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data," NAR chief economist Lawrence Yun said in a statement. "We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other.

Ford gets rolling on stock sale

Ford Motor (F, news, msgs) shares fell 17.6% to $5.01 today, the second-worst performer among S&P 500 stocks, after announcing late Monday it will sell 300 million shares of common stock to help boost its capital position and pay off its health-care obligations to the United Auto Workers union.

Ford, the only U.S. automaker that has not received aid from the federal government, said the move could raise between $1.7 billion and $2 billion. Ford has been able to reach an agreement with the UAW to lower labor costs by $500 million annually.

Rival General Motors has been struggling to reach a similar accord with the union, which is one of the government's requirements for the $15.4 billion GM has received in aid.

Ford's stock sale "will make people more confident about its future and raise confidence that Ford can avoid bankruptcy," John Casesa, an auto analyst with Casesa Shapiro Group, told The Wall Street Journal. And investors late today were starting to agree. The shares were up 3.4% to $5.18 after hours.

But another analyst thinks Ford may be a little optimistic.

"In our view, the sale of common stock is mildly positive because, depending upon how much cash is retained by Ford following the contribution to the (health-care) trust, the offering will somewhat reduce the danger of Ford's cash balances falling to dangerously low levels," said credit analysts at Standard & Poor's.

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GM shares fell 20.1% to $1.15, the largest decline among Dow and S&P 500 stocks. The stock had dropped to as low as $1.09 -- a 76-year low.

The stock tumbled after CEO Fritz Henderson on Monday said that bankruptcy for the automaker has become "more probable." GM also confirmed Monday that six top executives, including Vice Chairman Bob Lutz and North America President Troy Clarke, sold all of their holdings in the company, according to Securities and Exchange Commission regulatory filings.

GM faces a June 1 deadline to secure concessions from the UAW and its bondholders or else it faces bankruptcy.

Bernanke: Stress test results 'encouraging'

Now that the stress tests of the 19 biggest U.S. banks are over, Federal Reserve Chairman Ben Bernanke had some optimistic comments about the results.

"If it helps reduce uncertainty among investors regarding future losses and capital needs, and thereby improves the banking system's access to private capital, one of the key objectives of the program will have been achieved," Bernanke said Monday night at a Federal Reserve Bank of Atlanta conference in Jekyll Island, Ga. "Initial indications are encouraging."

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The 19 banks in the stress test hold two-thirds of the assets and more than one-half of the loans in the U.S. banking system.

"Whether the objectives of the assessment program were achieved will only be known over time," Bernanke said. "We hope that in two or three years we will be able to reflect on the banking system's return to health with a sharply diminished reliance on government capital."

Bank of America raises $7.3 billion

Bank of America (BAC, news, msgs) took a step toward raising cash after the government said the bank needed $33.9 billion in capital reserves.

Bank of America reportedly sold 13.5 million shares of China Construction Bank for $7.3 billion.

"The stake sale is just a small step toward raising the recommended amount of capital," Christian Jin, a fund manager at HI Asset Management in Seoul, told Bloomberg News. "Bank of America still has a long way to go to meet that target."

Microsoft to make first-ever bond offer

Microsoft (MSFT, news, msgs) raised $3.75 billion in the first bond offer in the company's history.

Microsoft said on Monday sold $2 billion of 2.95% notes due June 1, 2014, $1 billion of 4.20% notes due June 1, 2019 and $750 million of 5.20% notes due June 1, 2039.

Microsoft is taking advantage of its triple-A credit rating for the sale and plans to use the proceeds from the sale to fund a $40 billion share-buyback program. The company also plans to build data centers to try to catch up with rival Google (GOOG, news, msgs), according to Bloomberg News. And, of course, Microsoft is no stranger to acquisitions. The software giant has said it wants to build its cash position to take advantage of the weak economy and its opportunities for purchases of smaller and midsize companies.

Microsoft shares were up 3%to $19.89.

CEO Steve Ballmer this morning dismissed rumors that Microsoft was interested in buying SAP (SAP, news, msgs) and said that the company is mostly done with layoffs.

Trade deficit widens for first time in 8 months

The U.S. trade deficit widened by 5.5% to $27.6 billion in March, the Commerce Department reported this morning. It was the first time the deficit widened in eight months.

The trade deficit compares exports of goods and services to imports -- there's a trade surplus when exports exceed imports.

Exports of goods and services fell 2.4% to a seasonally adjusted $123.6 million in March, the lowest level since August 2006. Imports fell 1% to $151.2 million, the lowest level since September 2004.

In February the trade deficit hit a nine-year low of $26 billion. In February 2005, the trade deficit was $728 billion.

Meanwhile, the federal deficit is expected to have risen last month, according to a report from the Treasury Department this afternoon.

The deficit is expected to come in at about $200 billion in April, up from $159 billion in March. The total deficit is currently $956.8 billion, almost double what it was a year ago.

The White House said on Monday that the budget deficit for the entire year was expected to reach $1.8 trillion. That is almost 13% of the nation's gross domestic product.

Andrew Rosenbaum contributed to this report.

Short hits from the markets -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	0.180%	0.155%	0.025	44.00%	56.52%
5-year Treasury note yield	2.013%	2.028%	-0.015	-0.20%	29.79%
10-year Treasury note yield	3.175%	3.180%	-0.005	1.63%	41.49%
30-year Treasury bond yield	4.157%	4.180%	-0.023	2.79%	54.48%
Currencies
U.S. Dollar Index	82.420	82.795	-0.375	-2.78%	0.33%
British pound in dollars	$1.5279	$1.5119	0.0159	3.32%	3.70%
Dollar in British pounds	£0.6545	£0.6614	-0.0069	-3.21%	-3.57%
Euro in dollars	$1.3657	$1.3583	0.0074	3.22%	-2.51%
Dollar in euros	€ 0.7322	€ 0.7362	-0.0040	-3.12%	2.58%
Dollar in yen	96.41	97.36	-0.95	-2.15%	6.35%
Canadian dollar in U.S. dollars	$0.861	$0.857	$0.0034	2.74%	5.23%
U.S. dollar in Canadian dollars	$1.162	$1.166	-$0.0046	-2.66%	-5.04%
Commodities
Gold	$923.90	$913.50	$10.40	3.67%	4.48%
Copper	$2.0860	$2.0885	$0.00	1.88%	47.94%
Silver	$14.2150	$13.9100	$0.31	15.33%	23.15%
Corn	$4.2750	$4.2125	$0.06	7.89%	5.04%
Crude oil (NYMEX) (per barrel)	$58.85	$58.50	$0.35	15.12%	31.95%